The digital version of China’s national currency, the Digital Yuan (e-CNY), can now be gifted through the central bank’s digital app, according to a recent announcement.
The People’s Bank of China’s digital currency electronic payment (DCEP) app, which was launched in April 2021, now allows users to send digital yuan as gifts to other users.
The DCEP app was developed as a pilot project in several Chinese cities, including Shenzhen, Chengdu, Suzhou, and Chengdu. It has since been rolled out to other cities across China and is already available to millions of users.
The addition of the gifting feature is seen as a significant development for the DCEP app and the Digital Yuan, as it expands the use cases beyond just making purchases and paying bills. The gifting feature is expected to increase the popularity of the Digital Yuan and encourage wider adoption.
The Digital Yuan is a Central Bank Digital Currency (CBDC). It is not the same as cryptocurrencies like Bitcoin, which are decentralized and not backed by any government. The Chinese government has been actively promoting the use of the Digital Yuan, as it reports to view it as a way to reduce the country’s reliance on physical cash and increase the efficiency of financial transactions.
In theory, a CBDC affords the user more trust and security than the popular Stablecoins. However, as discussed in our earlier articles, the wider ramifications for the global economy could be dramatic, with the status of the US Dollar challenged as the global currency reserve.
Furthermore, all fiat is issued by Central Banks, so all Stablecoins are susceptible to the effects of quantitative easing, but CBDC’s susceptible to direct quantitative easing and as yet, seemingly no Proof of Reserve measures are in place.
Many will argue that this is further evidence of the need for Bitcoin, and it will be interesting to see how the landscape for CBDC’s and Stablecoins unfolds in 2023.